Monday, May 29, 2017

Today's guest post is from Oscar Slotboom of Houston Freeways. A bit longer than usual posts here, but with some great updates.

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North Houston Highway Improvement Project (including downtown)

In conjunction with public hearings in May and release of the Draft Environmental Impact Statement, TxDOT recently released updated schematics for the North Houston Highway Improvement Project, which includes the planned total rebuild of downtown freeways. I attended two of the three public meetings, and there were about 10-15 speakers at each meeting, with minimal or negligible opposition among the speakers. So this project appears to have community support.

TxDOT and its consultant HNTB have continued the process of ongoing improvement of the design, with incremental refinements mostly on the north side of downtown. The numerous improvements on the northwest side of downtown and downtown access spur (on the west side of downtown) combine to provide a significant improvement in that area. These changes are most easily viewed in the green annotations I added to the official schematic here.

I have updated my detailed analysis of the design on HoustonFreeways.com, noting the improvements but also identifying 12 remaining items of concern in the design. Some of these concerns have been submitted to TxDOT during previous comment periods, so they likely have already been evaluated with no action taken. Nevertheless, I included the complete list of all issues, new and previous, to provide an overall summary of remaining concerns.

With a price tag of $4 billion for the downtown work and around $7 billion for the overall project, it certainly makes sense for TxDOT to take a look at every possible opportunity for improvement to ensure we get the best possible design for the huge expenditure.What Could Have Been
I also prepared this map of a potential relocation of the IH 45 main lanes to create space to bring managed lanes through downtown. This option was not formally studied, although it may have been rejected very early in the process. It is now too late to consider this option, but I think this would be the only way to create a north-south corridor of managed lanes through downtown, assuming the Pierce Elevated will be removed. (see previous post on MaX Lanes)

Texas Legislature

Transportation was not expected to be an issue receiving much attention in the session which ended Monday, and that was mostly true. Here’s a summary of the results for this session.

Funding

The main question for this session was whether the legislature would fully fund the transfers of general revenue to TxDOT as specified in Proposition 7, approved by voters in 2015. The answer turned out to be no, but the immediate impact is expected to be minimal. TxDOT was slated to receive $4.7 billion in Proposition 7 funding in the next budget cycle, but that amount was reduced to $2.9 billion due to a delay in the transfer of $1.8 billion. Exact Proposition 7 amounts in the budget document are $2.205 billion in fiscal 2018 and $700 million in fiscal 2019.

However, the delay in the $1.8 billion is reportedly only one month, from August 2019 to September 2019, an accounting gimmick to move the money to the next budget cycle. So this one-month delay is not expected to affect projects being planned with Proposition 7 funds. But it is not clear if and when funding will catch up to restore the $1.8 billion, or if the $1.8 billion is permanently deferred. According to a report in the Dallas Morning News, House Appropriations chief John Zerwas, R-Richmond, said the legislature is committed to restoring the $1.8 billion when budget conditions allow.

The budget covers fiscal years 2018 (September 2017-August 2018) and fiscal year 2019.

2018 budget amount: $12.4 billion

2019 budget amount: $14.2 billion

Debt service is high and rapidly increasing, $815 million in FY 18 and $1.23 billion in FY 19. Nearly all of this increase is the result of shifting certain interest payments from the general budget to the TxDOT budget as a result of Proposition 7. Total financing costs in the biennium are listed at $2.3 billion.

A big increase in expenditures for professional fees and services, from $1.06 billion in FY 18 to$1.80 billion in FY 19. Presumably, this large increase is due to planning and engineering services for Proposition 7 projects.

The budget document instructs TxDOT to expand Houston’s Green Ribbon program to other areas of the state

Comprehensive Development Agreement Failure

House bill 2861 called for authorizing 18 projects statewide to be developed using comprehensive development agreements, including two in Houston, the proposed Hempstead Tollway and Interstate 45 between Interstate 10 and Beltway 8, which is all of the North Houston Highway Improvement project outside of the downtown area. Comprehensive Development Agreements, called public-private partnerships in most places outside Texas, use private money to finance projects, with the private funding entity receiving the toll payments. The SH 288 toll lanes are the only project being built with this arrangement in Houston. The bill moved steadily through the legislative process, but the House soundly defeated the bill on May 5. According to remarks by the North Central Texas Council of Governments, it was believed to have failed due to general anti-toll sentiment in the House and a desire to wait and see what happens at the federal level, with President Trump’s infrastructure plan still a work in progress. So TxDOT cannot pursue the two Houston projects or any other projects as new CDAs in the next two years.

Anti-Toll Legislation

Numerous bills seeking to limit or curtail toll roads were filed, mostly in the House, but all of these bills died, most with little or no progress. However, three anti-toll provisions did become amendments on the TxDOT sunset bill.

TxDOT Sunset Legislation and Other Bills

The legislature must periodically review all state departments to authorize their continued existence, the so-called sunset process. This year TxDOT was subject to the sunset review process, and the TxDOT reauthorization bill was a must-pass bill which was approved on Saturday and sent to the governor. Due to the legislative procedural meltdown earlier this month, many bills died and the TxDOT sunset reauthorization became a vehicle for including provisions as amendments on the bill (final conference committee report). While there were no amendments specific to Houston, some amendments of statewide interest include the following:

Tolls will be removed on State Highway 255 in Laredo, which is formerly the Camino-Columbia private toll road which went bankrupt and was purchased by TxDOT and now operates as a TxDOT toll road. To the best of my knowledge, this will be the first removal of tolls in Texas since the Dallas-Fort Worth Turnpike became a freeway in 1978.

There is a provision to accommodate the potential removal of tolls on the Loop 375 managed lanes in El Paso, which (if implemented) would be the first removal of tolls from managed lanes in Texas. The Loop 375 managed lanes have been a failure, generating negligible traffic and revenue.

A requirement that any TxDOT funds used for financing toll roads must be repaid by the tolling agency managing the project (non-retroactive)

Imposes new rules on delinquent toll collection, including limits on administrative fees

Imposes a large number of reporting and administrative requirements on TxDOT relating to project cost, schedule, performance measures, online reporting and coordination with MPOs

Requires TxDOT contractors to use E-Verify to verify legal status for employment

Other bills sent to the governor (not signed as of May 29) include:

SB 2205 defines rules and regulations for fully-autonomous self-driving cars. This will clarify the legal issues, an important step toward actually having autonomous vehicles on the road.

HB 2646 which authorizes TxDOT to purchase right-of-way for a project before it receives a record of decision of environmental clearance. This will be a useful tool, especially for projects where environmental clearance can take many years.

SB 977 prohibits the use of state funds to plan, build or operate high speed rail operated by a private entity

Neither of these laws is expected to have a significant effect on Texas Central’s plans. The bill which probably posed the greatest threat to the project was SB981, which would have required the project to be compatible with more than one type of train technology. Since the project is being designed to use Japanese technology, this could have been a show stopper. But the bill died in mid-April. So the Houston-Dallas high speed rail project is alive and well.

During the presidential campaign, Trump spoke about a trillion-dollar infrastructure investment, but the plan is still being developed and details are not expected until the third quarter of this year (here and here). Preliminary indications are that it will focus on public-private partnerships, which of course translates to toll roads. Preliminary numbers mentioned are for $200 billion in new federal money to be used to attract $800 billion in private funds. Michael Morris, head of the North Texas Council of Governments, has commented that the completed Dallas-Fort Worth PPP projects (LBJ Texpress and North Tarrant Texpress) are being used as a model in formulating the plan, and the DFW projects also used the 4-to-1 private/public money leverage ratio.

There are many reasons to be skeptical that this will plan will move forward in any shape or form, even massively downsized as a token effort.

The long delay in developing a plan suggests there is difficulty getting a consensus on a plan which can get sufficient support for approval.

President Trump’s influence on Capitol Hill is weak and probably getting weaker, so persuading Congress to adopt a sea change in infrastructure finance will be difficult.

PPPs are not consistent with the values of Congress. House and Senate members generally want to bring home the goods (some would say pork) to their district. Bringing home a PPP which imposes hefty tolls on their constituents and privatizes previously public assets is not necessarily good politics, and could be bad politics.

Congress has shown minimal interest in PPPs and tolling in recent transportation reauthorizations.

Previous reauthorizations of transportation legislation have been difficult and were delayed by numerous short-term stopgap reauthorizations, even though the current FAST Act (expiring in 2020) generally continued long-established policies.

Passing a sweeping PPP-heavy plan would likely rely exclusively on Republican votes, and as we’ve seen, holding together the slim Republican majorities in the House and Senate will be very difficult.

Financing $200 billion for the public share of PPPs will be difficult or impossible without increasing the deficit or raising fuel taxes.

PPPs financed by project revenue are generally suitable for toll roads only and will do little or nothing to help aging urban rail systems with massive deferred maintenance costs, particularly in Washington DC, Boston, New York and Chicago. Without funding for those political interests, the base of potential support is reduced.

Congress is still going to be focused on other issues like Affordable Care Act repeal/replacement tax code reform and another budget battle looming at the end of September.

About Me

Social Systems Architect and entrepreneur with a genuine love of my hometown. I cover a wide range of topics in this blog - including transportation, transit, economic development, quality-of-life, city identity, and development and land-use regulations - and have published numerous Houston Chronicle op-eds on these topics. I'm a Founding Senior Fellow with the Center for Opportunity Urbanism and co-authored the original study with noted urbanist Joel Kotkin and others, creating a city philosophy around upward social mobility for all citizens as an alternative to the popular smart growth, new urbanism, and creative class movements. I am a native Houstonian, 6th-generation Texan, attended Rice University for my BSEE and MBA, and a former McKinsey consultant and adjunct faculty member with Leadership Houston. I am currently the founder of Coached Schooling, pioneering a transformational new approach for a more effective and engaging 21st-century K-12 education combining the best elements of eLearning, home and traditional schooling. CONTACT EMAIL: tgattis (at) pdq.net - send me an email if you would like to receive these posts via email, or see the Google Groups signup box below.